Canadian investment giant Brookfield has unveiled a US$5 billion retail rescue package to support struggling retailers during the fallout from Covid-19.
The global retail landlord will take non-controlling stakes in businesses with $250 million-plus revenues that have been significantly affected by the downturn.
The package, designed by Brookfield vice-chairman Ron Bloom, is a boon for a sector that has largely ground to a halt. The NYSE-listed asset manager has material exposure to malls in the US through its listed vehicle Brookfield Property Partners.
Brookfield Property Partners has described the impact of Covid-19 on its tenants as “acute”. And while shares in the group have declined more than 50 per cent since January it has the benefit of drawing upon a US$6 billion line of credit from its asset management giant parent.
The US$5 billion retail bailout provided by Brookfield will shore up troubled retailers, providing businesses that have operated for at least two years with much-needed capital.
“This initiative is being designed to assist medium-sized enterprises in getting back on their feet,” Bloom said.
“We believe this is a critical component to getting the economy moving again.”
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A former restructuring banker at Lazard, Bloom was the principal architect of the Obama administration’s restructuring of the automobile industry during the global financial crisis.
Pre-covid-19, Brookfield had bet big on retail despite headwinds in the sector over recent years. In January, the group rescued fashion chain Forever 21 from bankruptcy. The chain has a significant presence across many of Brookfield’s US malls.
To qualify for the rescue fund, retailers would need to operate in markets where Brookfield has a presence and have at least $250 million in normalised revenues.
In addition to an injection of capital, Brookfield said it will assist retailers in shoring up their long-term business outlook.
“We look forward to contributing capital and expertise to support the retail sector through this time and position businesses for long-term success,” Bloom said.